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Outline of Transactions for the Purchase of CP with Repurchase Agreements

日本語

As of February 25, 2009
Bank of Japan
Financial Markets Department

I.  Introduction

This document is an outline of the purchase of commercial paper, dematerialized commercial paper issued by domestic corporations, dematerialized commercial paper issued by foreign corporations with guarantees, government-guaranteed dematerialized commercial paper, dematerialized asset-backed commercial paper, and dematerialized commercial paper issued by real estate investment corporations (hereinafter referred to as CP) with repurchase agreements, which the Bank of Japan conducts based on the "Principal Terms and Conditions for the Purchase of CP with Repurchase Agreements." Please note that the following information may change in the future.

II.  Principles

A.  Location of purchases/sales

The Bank's Head Office (Operations Department).

B.  CP to be purchased

Among CP, those issues deemed eligible by the Bank.

C.  Repurchase agreements

CP purchased shall be resold within three months from the day following the purchase date.

D.  Method for auctions

A multiple-price competitive auction under the conventional method shall be conducted for each purchase in which counterparties bid their desired yields for the period during which CP is held by the Bank.

III.  Auction

A.  Notification of auction guidelines (offer)

When conducting purchases of CP with repurchase agreements, the Bank selects auction participants from eligible counterparties and notifies them of the following matters through the Bank of Japan Financial Network System (BOJ-NET).

  1. (a) Total amount of offer
  2. (b) Purchase date and payment time for the purchasing price
  3. (c) Resale date and payment time for the reselling price
  4. (d) Bid-submission cut-off date and time
  5. (e) Other matters deemed necessary by the Bank

B.  Submission of bids

By the bid-submission cut-off date and time notified in subsection A, auction participants notify the Bank of (1) their desired sale amount per desired yield through the BOJ-NET; and (2) their desired number of CP to be sold per face value or desired unit of sale per minimum unit of transfer, by fax.

C.  Acceptance of bids (notification of respective results to auction participants)

The Bank, after receiving bids as described in subsection B, accepts bids by starting with the highest desired yield and continuing down until the total amount of bids accepted reaches the amount offered. However, the Bank reserves the right to reject all or some of bids which a counterparty submits when deemed appropriate.

When accepting bids, the Bank notifies auction participants who submitted bids as described in subsection B of the amount it will purchase per yield. Here and hereinafter, those who receive such notifications will be referred to as sellers.

IV.  Purchase of CP and Settlement on the Resale Date

A.  Purchase of CP

The seller submits documents specified by the Bank to the Bank by the date and time determined by the Bank.

The Bank pays the purchasing price to the seller on the purchase date and at the payment time for the purchasing price, notified in subsection III. A.

B.  Settlement on the resale date

The Bank delivers CP to the seller after the seller's payment of the repurchasing price, on the resale date and at the payment time for the reselling price notified in subsection III. A.

V.  Operation Timetable

Please refer to the "Operation Timetable" for the timetable of operations described in section III and IV.